On May 9, 2013 the daily average concentration of carbon dioxide in Earth's atmosphere surpassed 400 parts per million (ppm) for the first time in human history.[1] As Robert Kunzig of National Geographic News shares:

The last time the concentration of Earth's main greenhouse gas reached this mark, horses and camels lived in the high Arctic. Seas were at least 30 feet higher—at a level that today would inundate major cities around the world.

Many are calling this a “symbolic mark.” It is neither. This milestone is based on real measurements of real atmospheric changes. It is not a mark like the mile markers we see along an endless highway.  

Why is the 400 ppm milestone so important? According to the U.S. Presidential Climate Action Project, we have to stabilize atmospheric CO2 at concentrations around ppm to avoid catastrophic impacts. Stabilizing carbon dioxide at 450 ppm by 2050 requires global emissions to decline by 60 percent overall (with an 80 percent reduction by industrialized countries). For more on the Presidential Climate Action Project’s position on emissions reductions, click here.
As you can see from the adjacent graph showing the levels of CO2 that have been observed at Mauna Loa, the longer-term trend is upward, and it is quickly approaching 450 ppm – the point at which global temperatures may begin to rise more than two degrees Celsius above pre-industrial levels and result in catastrophic impacts. 

There is reason for hope. According to an October 21, 2013 report by the U.S. Energy Information Administration, U.S. energy-related carbon dioxide emissions declined 3.8 percent in 2012. This change included a 5.1 percent decline in energy use per dollar of GDP as well as an increase in emissions on a per capita basis.

While these reductions are a strong start, they are not enough. Reducing greenhouse gas (GHG) emissions by 60 to 80 percent requires large-scale solutions that can be mobilized in the very short-term.

We need appropriate policies, regulations and incentives from governments.  

We need investments and innovation by private and public sectors, hopefully in a synergistic and collaborative manner. We also need companies and non-government organizations (NGOs) to reinvent themselves and their operating models to optimize the use of raw materials and drastically reduce GHG emissions.

NGOs have been important contributors towards the progress that has been made to date – raising awareness of issues to brands, consumers and industries, helping to set credible standards, and more. They are now working alongside industries and global brands. I think it would be wise for NGOs to reevaluate the value they offer and whether their current approach will remain relevant as more businesses take direct action to address core issues affecting their carbon footprint.

Companies also need reinvention to ensure they are successful and relevant in the future reality. For example, Germany’s second largest utility, RWE – a provider of electricity and gas for 24 million customers throughout Europe – is reinventing itself from a traditional energy company that develops and operates power plants to a ‘renewable energy service provider’ that helps manage and integrate renewables into the energy grid. Utilizing its infrastructure and other core strengths, RWE is shifting its business model ‘from volume to value,’ according to a recent article from Greentech Media, because “incremental improvement of the existing value chain” is not enough.
 
We need more businesses, utilities and governments to make this shift from incremental to continuous improvements. Companies must stop ‘aspiring’ to reach long-term goals and, instead, deliver measurable and scalable solutions in the short-term. We need system-wide step change to reverse the abuse and neglect under which we have been operating.

It is time to put everything having to do with practicing business today – from our supply chains to our product (during and after its planned life) to the ways we consume and go about our daily lives – into a centrifuge and spin all the waste, harmful impacts and unsustainable practices out and reconstruct something radically different and radically better. It’s time for a sea change in the way we do business, before the sea changes so alterably that it’s too late.

[1] National Oceanic and Atmospheric Administration has measured carbon dioxide levels at Mauna Loa, Hawaii for the past 55 years. Although there is consensus on the longer-term predictions, they have not been directly measured.

The Sustainable Coffee Conundrum: A study into the effects, cost and benefits of implementation modalities of sustainable coffee production in Vietnam is an interesting study of the limited effectiveness of the UTZ Certified program (UTZ Certified) on its intended outcomes. I have been posing these very questions to the sustainable agriculture community for the past few years: Are certification systems, especially those with complex standards and robust credibility assurance processes, effective and scalable?

UTZ Certified is a leading sustainable coffee program that was launched in 2002. The program was originally called Utz Kapeh, which translates to “good coffee” in the Mayan language of Quiché. Now known simply as UTZ Certified, the program has been a model – at least in part – for many subsequent programs aimed at addressing key environmental, labor and economic issues. UTZ Certified centers on two activities:

·       Compliance with the code of conduct, and
·       Providing training to help farmers professionalize their business.

In addition to compliance and training at the farm level, UTZ Certified also introduced a platform that would help link buyers with sellers with the aim of controlling costs and premium mark-ups along the supply chain. I applaud UTZ Certified for testing a new model that promotes farmer training and for creating a more direct market-based model. Now let’s see what we can learn from the study.

Vietnam is the second largest supplier of UTZ Certified coffee, representing 20 – 25 percent of all UTZ Certified coffee.

The study analyzed five types of programs in Vietnam: one control group, one farmer field school (FFS) without UTZ Certified (FFS only), and three FFS with UTZ Certified with varying degrees of training (FFS + UTZ Certified) – one high-, one medium-, and one low-intensity. The study conducted three separate analyses:

1.     Performance on the basis of 63 outcome and impact indicators.
2.     Effect of implementation of professionalization activities (e.g. training quantity, quality of trainings, and                     quality of trainers) in comparison with effects of compliance with the UTZ Certified standard
3.     Implementation costs of UTZ Certified certification and training

Some specific findings include:

·       The FFS supported groups – with UTZ Certified or without – showed better overall performance compared to         control groups with the highest gains from more intensive, high quality training programs. However, this has             few effects on impact indicators.
·       Efficiency of water and fertilizer – a significant issue in Vietnam – was only improved in the FFS + UTZ                     Certified group. However, the study indicates that other (unidentified) social and environmental factors had a         greater influence on productivity and efficiency that training or UTZ Certified.
·       Training costs for average productivity farmers (e.g. farming 3.68 metric tons per hectare (ha) on 1.35ha) were         approximately $75 per farmer per year in the FFS only model. Lower intensity trainings cost less but showed             limited impacts.
·       There was no overall impact on farm economics for any of the groups. At farm level, in all groups, costs                     incurred to comply with the UTZ Certified code appear to have negative influence on production costs and                 earnings. Premiums associated with UTZ Certified can help farmers recoup some costs of implementation but         not all.

The authors conclude that it’s time to dismiss UTZ Certified’s hypothesis that “efficiency improves with UTZ Certified certification.” With this said, they also found that the provision of more high quality trainings by competent trainers is the most critical factor to achieving overall positive results. Moreover, while UTZ Certified in this case can lead to access to some training and to the uptake of management tools (e.g. recordkeeping and investment planning), it does not lead to improvements in farming efficiencies and better farm economics.

The study also found issues with UTZ Certified’s assurance systems, specifically that up to 30 percent of UTZ Certified farmers were not actually in compliance. Such a discovery poses a risk to the credibility of the UTZ Certified program.

There is always a tension between the cost (and scalability) of a program and the credibility – both perceived and effective. I consider perceived credibility to be the belief that a program with high standards, good governance, and proper assurance processes and controls is “credible.” I view effective credibility as the belief that the program achieves the intended outcomes. I have long suggested that the credibility of a certification or standards system should be linked more closely to effective credibility. Stated more simply, is it working?  This study, as with many others I have read – indicates that the classic certification model may not be as effective in reducing impacts and improving economics as we thought, and is certainly not in all situations.

My friend and colleague, David Rosenberg, former Executive Director of UTZ Certified, contends that improvement to yield and farmer income can reach as high as 30 percent in regions such as Ivory Coast where farmers are not yet as productive as those in Vietnam. David reminds me that certification should not be viewed as the end game and should be recognized for the multiple purposes it serves:

·       Establish a 'better' baseline than non-certified products (e.g. minimum criteria must be met),
·       Promote continuous improvement (especially for less productive farmers),
·       Use a common language (and expectations) along the supply chain,
·       Enable comparative and credible monitoring and evaluation, and
·       Allow oversight by a multi-stakeholder body.

David and I both agree that certification is not the silver bullet but the common frameworks they provide are important. With this said, I have been quite vocal over the years on possible adjustments to the certification model that I believe will result in a larger overall impact. I envision a model that targets the most critical issues and provides resources to help farmers improve their operations. This new model would shift its focus from a product to a system. I have been promoting the following four potential adjustments:

1.     Simplify standards. The original intent behind some of the commodity roundtables (e.g. cotton, soy, palm and sugar) was to engage numerous producers and then help them continuously improve their practices and productivity over time. Somewhere along the way, we have created a system where only producers who meet a long, complex set of standards and criteria can qualify. We should consider a simpler process, one very similar to the classic Plan, Do, Check, Act process, which allows participants to address their most critical issues the first year (e.g. fertilizer and water use in the case of Vietnam coffee producers), and to adopt additional standards or practices over time. I was a bit cheeky last winter when I proposed that we simplify standards to one indicator – soil health – and then measure all benefits that result from the farmer’s focus and link them back to this one critical condition.

2.     Reduce costs. Programs must streamline and minimize non-critical, non-impactful activities and reallocate resources to more activities that result in measurable improvements and are not easily implemented by existing actors. I believe that supply chain actors can create a market and address the traceability and delivery of sustainable goods quite efficiently and effectively using systems that are already in place (possibly with some direction or standards for their performance). We should not be investing in traceability systems because they do not directly lead to improvements and they divert funds from more critical activities such as farmer training, access to quality inputs, and improved knowledge and support programs. As I like to say, “trace something through a supply chain and your efforts are only good for that time and that product. Train a farmer and the benefits will span over multiple generations.”

3.     Improve access to quality training. I wholeheartedly believe that farmer training and access to knowledge and quality inputs is the area of greatest potential and should be the focus of any sustainability / certification – and where we invest. The subject study comes to the same conclusion. Some governments do provide farmer support services as well as research and development, but there are many more farmers who do not have access to these services or benefits. Sustainability programs should spend the majority of their budgets in training and support services to the extent possible.

A shift in the way brands’ communicate their support of such programs – from a product to a brand level – can also lead to greater efficiency and scale and allow consumers to have a stronger connection to the farmers and brand. Relieving the need to certify, trace and market at a product level would allow us to evaluate and communicate progress at a system or industry level rather than at the costly and piecemeal farm-by-farm level. My ideal model would also allow consumers to support the program more directly and efficiently (and hopefully scale up faster). We could establish a system by which a consumer could sponsor a farmer or a farming community, bypassing the costly exercise of certifying and tracking a product from the farm to their home, and, more importantly, allowing them to purchase any product they like (e.g. the jeans that fit them best) from a trusted brand rather than the few spotlighted products that have sustainable attributes (that may or may not fit as well). Retailers could facilitate the consumers’ contributions (or even matching them) – for example, adding a contribution at point of sale – knowing that this would result in enhanced brand image and even possibly creating a value based relationship with their customers that is more powerful than a product by product loyalty. 

I am not sure if my model is the answer. But as we see more and more studies of the models we are operating today, they don’t appear to be the answer, either. It is time to adjust.

In SQ Consult’s recent newsletter article, Sustainability of supply chains: From trust to proof, SQ Consult partner, Sergio Ugarte, makes a strong case for the need for companies and policymakers to use the most credible certification schemes in the context of biomass supply chains for biofuels, including governmental mandates. He also suggests criteria to evaluate a scheme’s credibility.

While I wholeheartedly agree that credibility is important, I believe we should look beyond the credibility of an individual certification scheme. We must provide evidence that the overall use of sustainability schemes is credible, including adoption of such schemes on a meaningful scale with improved practices across all supply chain actors. We should also consider business, trade and supply chain infrastructure that may allow or hinder adoption by mainstream brands and supply chain actors.  

Mr. Ugarte references SQ Consult’s study, Guidance for the selection of best quality voluntary standards systems for the certification of biomass, soy and palm oil, produced for International Union for Conservation of Nature (IUCN) as well as a complementary Proforest publication when he states that selection of quality certifications should be based on:

1.     Identifying the schemes with most comprehensive criteria;
2.     Choosing a strict chain of custody method suitable to the characteristics of the supply chain;
3.     Selecting schemes with highest level of assurance;
4.     Calculating the cost and benefits of selected certification options;
5.     Selecting the best quality certification scheme for your sustainability ambitions. 

I don’t disagree with any of these criteria. However, there are costs – and limitations – associated with each one, which should be considered. A business’s or industry’s ability to apply and support the schemes and financially integrate it into business (and, thus, become financially sustainable) is equally important. I would hope that this ability would become a baseline standard.

To illustrate my point I would like to share an example using my client, IPIECA. IPIECA identified the following criteria, considerations and basis for them as important to consider when adopting a chain of custody system for biofuels in the context of government mandates in their paper, Chain of custody options for sustainable biofuels.

While governmental mandates, international standards, and certification programs are instrumental in promoting responsible production of sustainable biofuels, they are susceptible to fraud if not managed correctly, and can disrupt the supply chain, increase costs, and inflate bureaucracy. The processing and administrative requirements of typical chain of custody systems (physical segregation, mass balance and book and claim) should consider the following criteria.

1.     Maintains fungibility: Works within the existing petroleum supply chain’s transport, storage, trade and marketing system without impacting biofuels ability to be freely interchanged within this system.

2.     Limits disruption: Works within existing petroleum supply chain’s transport, storage, and delivery systems without negatively impacting the industry’s ability to provide consistent sources of fuel to the general public, at times despite fuel shortages, natural disasters or systems needs to go offline.

3.     Auditable and enforceable: Ability to systematically check and verify all certified biofuel related claims of every participant throughout the entire supply chain. This is typically done by an accredited independent auditor. Regulatory authorities or qualified third-party do accreditation and enforcement.

4.     Complexity: Being comprised of multiple steps, each of which poses additional and over rigorous documentation, processing, data entry and auditing or certification requirements resulting in higher bureaucracy, additional resource needs, costs.

The following considerations will help shape the success of a sustainable biofuels program:

Few certification programs—if any—have reached a significant scale, largely due to costs, distractions to business operations, transportation costs associated linking new supplier-buyer connections, and limited appetite of consumers to pay a higher price associated with non-food/premium products.

All three systems support the overarching intention of existing government mandates: support the shift from unsustainable and GHG intensive practices resulting from biofuel production. They must enable the industry to maintain the fungible nature of the global commodity trade while ensuring a level playing field for all economic operators.

It would strengthen the integrity and credibility of the system and associated claims if governments would also enforce compliance with systems and mandates. Systems should operate transparently and facilitate an appropriate level of transparency throughout the supply chain. Systems should be auditable and, ideally, audited on a routine basis.

Systems should be coordinated with other sustainable agriculture and biofuel systems (e.g., RSPO) to prevent the possibility of intentional or unintentional double counting of certified product.

If we want to shift industries to more sustainable supply chains, recognizing the relevance of these criteria will be important. The challenge lies in achieving scale, mainstream adoption, and financial sustainability without compromising the integrity of the individual schemes and the collective approach.